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Iran Begins Swapping Crude Oil with Iraq
Iran and Iraq began exchanging crude oil based on the CIF agreement on the 3rd. The Kirkuk oil field in northern Iraq ships 30,000 to 60,000 barrels of crude oil to Iran every day. In exchange, Iran ships crude oil of the same value to Iraq's southern Gulf ports.The Shana News Agency, affiliated with Iran's Ministry of Petroleum, reported that crude oil from the Kirkuk oil field in Iraq was transported across the border by tanker trucks on the 3rd to the oil storage warehouse in Dareshshahr, Ilam Province, western Iran, for use in Kerk, Iran. Manshah's crude oil refinery.
The CIF price includes the price of the goods and the insured freight cost for the seller to transport the goods to the designated location. According to reports, Iran and Iraq renegotiated and reached an agreement on logistics matters, and the crude oil swap was launched.
According to Reuters, the Iraqi central government took back control of the Kirkuk oil field from the Kurdish Autonomous Region government in October 2017, and subsequently suspended crude oil sales from the oil field. The swap that began on the 3rd was the first time that the Iraqi government agreed to ship crude oil from the Kirkuk oil field to Iran, thus restarting crude oil sales from this oil field.
Iran and Iraq plan to build new crude oil pipelines in the future to avoid using tank trucks for transportation.
In September last year, the Kurdish-controlled areas of Iraq insisted on holding a referendum aimed at seeking independence for this area, despite widespread opposition from the international community. In order to punish the Kurdish region, the Iraqi central government sent troops to Kirkuk last October to recapture the oil fields and territory occupied by the former.
Kirkuk Oilfield is one of the largest and longest-operated large oilfields in the Middle East, with a recoverable capacity of 9 billion barrels of crude oil.
Analysts believe that after the United States withdraws from the comprehensive agreement on the Iranian nuclear issue, Iran is expected to be committed to safeguarding its interests in neighboring Iraq and compete with the United States, but it may encounter resistance. Moqtada al-Sadr, the leader of the "Walkers Alliance" who emerged as the biggest winner in the Iraqi National Assembly election last month, does not want Iraq to become a stage for wrestling between the United States and Iran.
The crude oil swap agreement reached between Iran and Iran may cause dissatisfaction with U.S. ally Saudi Arabia. The United States and Saudi Arabia have long accused Iran of trying to dominate the Middle East, which Iran denies.
Iraq’s crude oil reserves account for approximately 10% of the world’s total reserves, ranking third in the world after Saudi Arabia and Iran.
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